How do I keep my intellectual property safe when working with OEM Manufacturers in China or India?

How do I keep my intellectual property safe when working with OEM Manufacturers in China or India?

By : Varun Khetrapal

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You have a product or are in the process of developing one
that is your own intellectual property. You’ve manufactured it under your close
supervision till now or you’re looking for an OEM partner to tie up with to
leverage the lower costs of production they may be able to achieve. There’s
only one thing stopping you – you’re worried that the product you’ve put all
your head and heart into is going to have 10 odd knock offs available on
Alibaba or eBay if you end up out sourcing your manufacturing. If this sounds
like you, listen up! You’re not alone. IP theft is a concern for not only you,
but several small businesses and start ups.

But first,

What is intellectual
property and how do you protect it?

Intellectual property refers to the creation of ideas or
concepts by a person or company – such as trademarks, patents, copyrights and
business secrets.

In reference to the manufacturing of your hardware products
– everything from the conceptual idea, to the engineering drawings to the logos
and packaging are referred to as intellectual property in this case.

So let’s dig right into it.

First of all, you’ll want to make sure you’re partnering
with the right contract manufacturer for your project. This is no easy task by
any feat. Lucky for you, we’ve framed up a great guide on How
to Find A Manufacturer For Your Hardware Products. However, this is only
solves part of your problem. The wider challenge is to ensure there are
preventative measures that are in places should things ever get out of hand.

“A non-disclosure agreement (NDA), also known as a
confidentiality agreement (CA), confidential disclosure agreement (CDA),
proprietary information agreement (PIA) or secrecy agreement (SA), is a legal
contract between at least two parties that outlines confidential material,
knowledge, or information that the parties wish to share with one another for
certain purposes, but wish to restrict access to or by third parties.”

If your product is unique, it is more than likely that your
chosen manufacturer will ask you to share engineering drawings or samples so
that they may evaluate the product to be able to quote you accurately.

While an NDA may not necessarily be the easiest to enforce
in a country or legal system which is unknown to you, it does create a sense of
security for you (the buyer), and clarifies your intent to the supplier for
ensuring there is confidentiality for product/conversation in question. We will
explain more on this later.

Register Your Patent/Trademark/Copyrights

Reality is an NDA is never going to be a fool proof way to
prevent manufacturers/suppliers from misusing your intellectual property. On a
bad day, things do go wrong and when this happens it is likely that the person
or company that has leaked your IP, will likely do so knowingly and under the
belief that you do not have the resources and capacity to follow up with legal
action.

Your strongest and most powerful option is to register
patents, trademarks and copyrights in your target selling markets. For example,
if you intend on selling your hardware product primarily in United States and
United Kingdom, you would need to ensure that your intellectual property is
registered with the relevant authorities in these countries.

What this does is it prevents the manufacturer/supplier or
any other party who manages to get their hands on your IP from selling it
legally in your target markets. Yes, there is always going to be a likelihood
that counterfeit or knock-off products find their way onto the grey market
through backdoor channels – however you will be able to take legal action
relatively easier having the right legal tools in place.

Spread Your Risk

Lastly, a common tactic many small businesses and start ups
employ is reducing their risk by spreading their production across multiple
manufacturers/suppliers. For example, if you have a product that is an assembly
of several parts – one option may be that you break up the production of this
by assigning different manufacturers for each component, and ultimately
assemble the final product yourself.

Ofcourse there are ramifications for this; you may struggle
to ensure the product quality and visual appearance is standardised across the
multiple suppliers. There is also a likelihood that your costs may shoot up for
the same product given that each manufacturer needs to take into account their
fixed costs for each manufacturing run.

Ultimately this is a choice you will need to make – but
nonetheless, it stands as an option.

Conclusion

So to summarise – we’ve covered what intellectual property
is and why it’s important to understand your rights. The pros and cons of NDAs
and why you should not take them for granted. Protecting your brand, and right
to sell your IP in your own target markets. Lastly, mitigants you can take to
spread your risk.

At the end of the day, there will always be a greater risk
associated with contract manufacturing over manufacturing in house, but with
the correct precautionary steps taken and a carefully drawn up risk management
plan, you can be sure to avoid landing yourself in trouble.

Delware are OEM Hardware Manufacturers who have been in the
game for over 3 decades. While we do not manufacture everything in house (which
is something we are open about with our customers), we do have the networks,
resources, experience and capability to deliver top quality custom manufactured
products for our customers, fast and to their expectations.

Respected as one of the top precision turned parts
manufacturers in India, Delware have a strict intellectual property policy
where we take the privacy of our customers very seriously. This is why you will
find no mention of who our customers are on our website or otherwise – another
reason why we are regarded so highly in the field of contract manufacturing,
and why our customers often prefer us over our China custom manufacturing competition.

If you’re in the market for an OEM Hardware Manufacturer or
custom manufacturing & engineering services who will respect your rights
and look after your needs, let us show you why we are the right contract
manufacturer to help take your project to the next level.

Reach us via our contact
us page or message us on Live Chat to get the dialogue started for your
contract manufacturing needs today.